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AMBIENTUM BIOETHICA BIOLOGIA CHEMIA DIGITALIA DRAMATICA EDUCATIO ARTIS GYMNAST. ENGINEERING EPHEMERIDES EUROPAEA GEOGRAPHIA GEOLOGIA HISTORIA HISTORIA ARTIUM INFORMATICA IURISPRUDENTIA MATHEMATICA MUSICA NEGOTIA OECONOMICA PHILOLOGIA PHILOSOPHIA PHYSICA POLITICA PSYCHOLOGIA-PAEDAGOGIA SOCIOLOGIA THEOLOGIA CATHOLICA THEOLOGIA CATHOLICA LATIN THEOLOGIA GR.-CATH. VARAD THEOLOGIA ORTHODOXA THEOLOGIA REF. TRANSYLVAN
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The STUDIA UNIVERSITATIS BABEŞ-BOLYAI issue article summary The summary of the selected article appears at the bottom of the page. In order to get back to the contents of the issue this article belongs to you have to access the link from the title. In order to see all the articles of the archive which have as author/co-author one of the authors mentioned below, you have to access the link from the author's name. |
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STUDIA OECONOMICA - Issue no. 2 / 2011 | |||||||
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CAPITAL STRUCTURE THEORIES: A CRITICAL APPROACH. Authors: . |
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Abstract: This paper reviews the most important theories of capital structure, specifying the practical implications, as well as the strengths and weaknesses of these theories. Each theory is briefly described and some critical comments on the empirical implications are made. Both classical and modern theories of capital structures are discussed in terms of contributions they make to the field of corporate finance, as well as problematical issues such as unsolved explanations and conflicting results. The review highlights the fact that there was a transition from Modigliani and Miller’s (1958) irrelevance proposition to the modern theories (i.e., trade-off theory, pecking order theory, agency theory, market timing theory) which postulate that the market value of the firm is dependent of the firm’s debt ratio, because of the existence of taxes, financial distress costs, agency costs, information asymmetry and market imperfections on the financial market (Baker & Wurgler, 2002; Jensen & Meckling, 1976; Modigliani & Miller, 1963; Myers, 1984). JEL Classification: G32 Keywords: capital structure, trade-off theory, pecking order theory, agency theory, market timing theory |
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